Box Earnings 2019-10-31

BOX 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
EVBG	2,892	425	239	172	118	-44	-32	2,653	68%	-82.5	-10%
BL	2,853	524	192	255	199	-26	-3	2,790	78%	-1,026.1	-5%
MIME	2,783	663	472	361	266	-8	33	2,683	74%	81.3	-1%
CYBR	2,742	674	207	0	0	0	0	2,480			0%
TENB	2,732	481	360	310	259	-84	-74	2,546	83%	-34.3	-17%
RPD	2,722	636	549	283	204	-50	-26	2,596	72%	-101.8	-8%
ALRM	2,719	505	193	457	293	23	37	2,633	64%	71.2	5%
BOX	2,644	827	805	655	461	-133	-81	2,483	70%	-30.5	-16%
WK	2,562	280	270	269	195	-34	-28	2,468	73%	-87.3	-12%
APPN	2,382	228	171	246	152	-56	-52	2,301	62%	-44.3	-24%

box-10q_20191031.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2019


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission File Number 001-36805

Box, Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-2714444

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

900 Jefferson Ave.

Redwood City, California 94063

(Address of principal executive offices and Zip Code)

(877) 729-4269

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share		BOX		New York Stock Exchange, Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Small reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

As of November 29, 2019, the number of shares of the registrant’s Class A common stock outstanding was 149,626,825.

TABLE OF CONTENTS

	PART I – FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets as of October 31, 2019 and January 31, 2019	5
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended October 31, 2019 and 2018	6
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended October 31, 2019 and 2018	7
	Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended October 31, 2019 and 2018	8
	Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended October 31, 2019 and 2018	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 6.	Exhibits	64
	Signatures	65

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

our future financial and operating results; including expectations regarding revenues, deferred revenue, billings, remaining performance obligations, gross margins and operating income;

•

our ability to maintain an adequate rate of revenue and billings growth and our expectations regarding such growth;

•

our market opportunity, business plan and ability to effectively manage our growth;

•

our ability to achieve profitability and positive cash flow;

•

our ability to achieve our long-term margin objectives;

•

our ability to grow our unrecognized revenue and remaining performance obligations;

•

our expectations regarding our revenue mix;

•

costs associated with defending intellectual property infringement and other claims and the frequency of such claims;

•

our ability to attract and retain end-customers;

•

our ability to further penetrate our existing customer base;

•

our expectations regarding our retention rate;

•

our ability to displace existing products in established markets;

•

our ability to expand our leadership position as a cloud content management platform;

•

our ability to timely and effectively scale and adapt our existing technology;

•

our ability to innovate new products and features and bring them to market in a timely manner and the expected benefits to customers and potential customers of our products;

•

our investment strategy, including our plans to further invest in our business, including investment in research and development, sales and marketing, our data center infrastructure and our professional services organization, and our ability to effectively manage such investments;

•

our ability to expand internationally;

•

expectations about competition and its effect in our market and our ability to compete;

•

the effects of seasonal trends on our operating results;

•

use of non-GAAP financial measures;

•

our belief regarding the sufficiency of our cash, cash equivalents and our credit facilities to meet our working capital and capital expenditure needs for at least the next 12 months;

•

our expectations concerning relationships with third parties;

•

our ability to attract and retain qualified employees and key personnel;

•

our ability to realize the anticipated benefits of our partnerships with third parties;

•

the effects of new laws, policies, taxes and regulations on our business;

•

management’s plans, beliefs and objectives, including the importance of our brand and culture on our business;

•

our ability to maintain, protect and enhance our brand and intellectual property; and

•

future acquisitions of or investments in complementary companies, products, services or technologies and our ability to successfully integrate such companies or assets.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

BOX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	October 31,				January 31,
	2019			*	2019			**
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	200,890			$	217,518
Accounts receivable, net of allowance of $4,141 and $2,728		108,393				175,130
Prepaid expenses and other current assets		18,559				14,223
Deferred commissions		27,249				21,683
Total current assets		355,091				428,554
Property and equipment, net		189,865				137,703
Operating lease right-of-use assets, net		203,926				—
Goodwill		18,740				18,740
Restricted cash		—				238
Deferred commissions, non-current		56,525				53,880
Other long-term assets		19,771				11,046
Total assets	$	843,918			$	650,161
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	15,543			$	15,431
Accrued compensation and benefits		18,718				34,484
Accrued expenses and other current liabilities		31,229				31,378
Finance lease liabilities		49,306				28,317
Operating lease liabilities		40,335				—
Deferred revenue		312,375				353,590
Total current liabilities		467,506				463,200
Debt, non-current		40,000				40,000
Finance lease liabilities, non-current		82,637				44,597
Operating lease liabilities, non-current		213,369				—
Deferred revenue, non-current		13,272				21,451
Other long-term liabilities		6,359				49,508
Total liabilities		823,143				618,756
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, par value $0.0001 per share; 100,000 shares authorized, no shares issued and outstanding as of October 31 (unaudited) and January 31, 2019		—				—
Class A common stock, par value $0.0001 per share; 1,000,000 shares authorized; 149,478 shares (unaudited) and 144,311 shares issued and outstanding as of October 31 and January 31, 2019, respectively		15				14
Additional paid-in capital		1,269,904				1,166,443
Treasury stock		(1,177	)			(1,177	)
Accumulated other comprehensive (loss) income		(111	)			23
Accumulated deficit		(1,247,856	)			(1,133,898	)
Total stockholders’ equity		20,775				31,405
Total liabilities and stockholders’ equity	$	843,918			$	650,161

*	As reported and disclosed under ASC Topic 842

**	As reported and disclosed under ASC Topic 840

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

	Three Months Ended								Nine Months Ended
	October 31,								October 31,
	2019			*	2018			**	2019			*	2018			**
Revenue	$	177,156			$	155,944			$	512,679			$	444,673
Cost of revenue		56,302				44,724				158,858				126,397
Gross profit		120,854				111,220				353,821				318,276
Operating expenses:
Research and development		50,652				42,310				146,589				122,388
Sales and marketing		82,939				84,490				242,164				238,472
General and administrative		26,496				23,884				75,959				69,959
Total operating expenses		160,087				150,684				464,712				430,819
Loss from operations		(39,233	)			(39,464	)			(110,891	)			(112,543	)
Interest expense, net		(738	)			(47	)			(1,141	)			(208	)
Other loss, net		(653	)			(321	)			(840	)			(1,243	)
Loss before provision for income taxes		(40,624	)			(39,832	)			(112,872	)			(113,994	)
Provision for income taxes		272				364				1,086				924
Net loss	$	(40,896	)		$	(40,196	)		$	(113,958	)		$	(114,918	)
Net loss per share, basic and diluted	$	(0.28	)		$	(0.28	)		$	(0.78	)		$	(0.82	)
Weighted-average shares used to compute net loss per share, basic and diluted		148,555				142,366				146,997				140,559

*	As reported and disclosed under ASC Topic 842

**	As reported and disclosed under ASC Topic 840

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(unaudited)

	Three Months Ended								Nine Months Ended
	October 31,								October 31,
	2019			*	2018			**	2019			*	2018			**
Net loss	$	(40,896	)		$	(40,196	)		$	(113,958	)		$	(114,918	)
Other comprehensive loss***:
Changes in foreign currency translation adjustment		(7	)			(89	)			(83	)			(375	)
Net unrealized loss on cash flow hedge		(51	)			—				(51	)			—
Other comprehensive loss		(58	)			(89	)			(134	)			(375	)
Comprehensive loss	$	(40,954	)		$	(40,285	)		$	(114,092	)		$	(115,293	)

*	As reported and disclosed under ASC Topic 842

**	As reported and disclosed under ASC Topic 840

***	Tax effect was not material

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(unaudited)


	Class A Common Stock				Additional Paid-In			Treasury			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Stock			Income (Loss)			Deficit			Equity*
Balance as of January 31, 2019		144,311	$	14	$	1,166,443		$	(1,177	)	$	23		$	(1,133,898	)	$	31,405
Issuance of common stock upon stock option exercises		152		—		1,213			—			—			—			1,213
Stock-based compensation related to stock awards		—		—		35,678			—			—			—			35,678
Vesting of restricted stock units, net of shares withheld for employee payroll taxes		1,205		1		—			—			—			—			1
Employee payroll taxes withheld related to vesting of restricted stock units		—		—		(14,624	)		—			—			—			(14,624	)
Common stock issued under employee stock purchase plan		829		—		13,605			—			—			—			13,605
Other comprehensive income		—		—		—			—			88			—			88
Net loss		—		—		—			—			—			(36,828	)		(36,828	)
Balance as of April 30, 2019		146,497		15		1,202,315			(1,177	)		111			(1,170,726	)		30,538
Issuance of common stock upon stock option exercises		143		—		1,031			—			—			—			1,031
Stock-based compensation related to stock awards		—		—		38,035			—			—			—			38,035
Vesting of restricted stock units, net of shares withheld for employee payroll taxes		1,082		—		—			—			—			—			—
Employee payroll taxes withheld related to vesting of restricted stock units		—		—		(10,940	)		—			—			—			(10,940	)
Other comprehensive loss		—		—		—			—			(164	)		—			(164	)
Net loss		—		—		—			—			—			(36,234	)		(36,234	)
Balance as of July 31, 2019		147,722		15		1,230,441			(1,177	)		(53	)		(1,206,960	)		22,266
Issuance of common stock upon stock option exercises		122		—		764			—			—			—			764
Stock-based compensation related to stock awards		—		—		38,373			—			—			—			38,373
Vesting of restricted stock units, net of shares withheld for employee payroll taxes		989		—		—			—			—			—			—
Employee payroll taxes withheld related to vesting of restricted stock units		—		—		(9,494	)		—			—			—			(9,494	)
Common stock issued under employee stock purchase plan		645		—		9,820			—			—			—			9,820
Other comprehensive loss		—		—		—			—			(58	)		—			(58	)
Net loss		—		—		—			—			—			(40,896	)		(40,896	)
Balance as of October 31, 2019		149,478	$	15	$	1,269,904		$	(1,177	)	$	(111	)	$	(1,247,856	)	$	20,775

*	As reported and disclosed under ASC Topic 842

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONT.)

(In thousands)

(unaudited)

Class A and Class B

Common Stock*

Additional

Paid-In

Treasury

Accumulated Other

Comprehensive

Accumulated

Total

Stockholders'

Amount

Capital

Stock

Income (Loss)

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	148	$2,644

10-Q	2019-12-06	Quarter: 2019-10-31
10-Q	2019-09-06	Quarter: 2019-07-31
10-Q	2019-06-06	Quarter: 2019-04-30
10-K	2019-03-20	Annual: 2019-01-31
10-Q	2018-12-06	Quarter: 2018-10-31
10-Q	2018-09-07	Quarter: 2018-07-31
10-Q	2018-06-08	Quarter: 2018-04-30
10-K	2018-03-22	Annual: 2018-01-31
10-Q	2017-12-08	Quarter: 2017-10-31
10-Q	2017-09-08	Quarter: 2017-07-31
10-Q	2017-06-09	Quarter: 2017-04-30
10-K	2017-03-24	Annual: 2017-01-31
10-Q	2016-12-08	Quarter: 2016-10-31
10-Q	2016-09-07	Quarter: 2016-07-31
10-Q	2016-06-09	Quarter: 2016-04-30
10-K	2016-03-30	Annual: 2016-01-31
10-Q	2015-12-14	Quarter: 2015-10-31
10-Q	2015-09-11	Quarter: 2015-07-31
10-Q	2015-06-12	Quarter: 2015-04-30
10-K	2015-03-30	Annual: 2015-01-31

8-K	2019-11-26	Earnings, Exhibits
8-K	2019-08-28	Earnings, Exhibits
8-K	2019-07-12	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2019-06-19	Shareholder Vote
8-K	2019-06-03	Earnings, Exhibits
8-K	2019-05-06	Officers
8-K	2019-02-27	Earnings, Exhibits
8-K	2018-11-28	Earnings, Exhibits
8-K	2018-10-18	Officers
8-K	2018-10-15	Officers
8-K	2018-08-28	Earnings, Exhibits
8-K	2018-06-20	Shareholder Vote
8-K	2018-06-14	Shareholder Rights, Amend Bylaw, Other Events, Exhibits
8-K	2018-05-30	Earnings, Officers, Exhibits
8-K	2018-05-03	Officers
8-K	2018-02-28	Earnings, Exhibits
8-K	2018-01-18	Officers

EX-31.1	box-ex311_7.htm
EX-31.2	box-ex312_6.htm
EX-32.1	box-ex321_8.htm